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The ongoing slide in U.S. housing prices has scared some first-time buyers out of the market and kept them on the sidelines. While there’s always the risk that prices will fall further, young couples and growing families still need a place to live. And, if they do their homework, stick to a budget and shop carefully, this may be a great time to take the plunge.

My wife and I are currently in the market as first-time home buyers with excellent credit. We're not interested in flipping or land speculation, we simply want the little white-picket-fence home we've always wanted. Our worry is if we become homeowners and the housing market worsens even more that somehow we'll go down with it too. If we avoid the pitfalls of variable rate mortgages and make the "right" choices with quality lenders, are we naive to think that we might be resistant to problems if the market worsens?— Bryan L. New Haven, Conn.

There are never guarantees in real estate, and there are plenty of signs that things may get worse before they get better. But no matter what kind of economic conditions prevail, life goes on. And so should yours.

If it’s time for you and your wife to buy a home – you’ve saved something for a down payment, you’ve found a part of the world you’d like to spend time in, you’re tired of paying rent – by all means this can be a great time to buy a home. In many markets, there are a lot more homes for sale than there are buyers. That means you should be able to negotiate a better price than if there were multiple buyers for each house for sale.

As for your risks as a borrower, if you stick with good lender, read every document carefully, ask questions until you’re convinced you understand the answers, you should be fine. If you think the lender or mortgage broker isn’t giving complete answers, go find another one. Good lenders are always looking for people with good credit. If you don’t feel you’re not able to sort out the documents to your satisfaction, you may want to hire a lawyer. A few hundred dollars in legal fees now could save you thousands in interest payments later if you don’t understand your loan.

The harder part is determining a reasonable price for your new home. Some sellers have still not come to terms with the recent drop in prices and are holding out for an asking price that’s too high. Others are pricing more in line with market demand. After you’ve seen a half dozen houses or so in your price range, ask to see examples of recent actual — not asking — sale prices of comparable houses. (You can also look up recent home sales online on sites like Zillow.com.) The only way to determine what the market is paying is by looking at actual sale prices. And the only way to determine the true price of a specific home is to make a bid. If the seller says no, move on to the next house on your list.

The risk that most buyers face today is paying too much for the property. It’s impossible to predict how much longer — or how much further — housing prices will fall. Let’s go over that one more time. Some of the same real estate agents who assured buyers during the boom that they needed “get in now” before prices rose further are now reassuring potential buyers, for example, that recent interest rate cuts mean the worst is over. The only honest answer to the question: “Have prices bottomed?” is “No one knows.”

You also need to keep in mind that the national statistics about home sales, median prices, and foreclosures are averages. Areas where the boom in housing sales and prices was the strongest (places like California, Florida, Nevada) are now seeing the biggest drops. In other areas, where price gains were not as rapid, the market has remained relatively stable. So your risk of further price declines in these areas is more limited.

Though national median price of an existing home was down 1.5 percent in the second quarter compared to a year ago, it was up 1.3 percent in the New Haven-Milford market. Some areas are seeing much bigger swings: the median price for the same period fell 11.3 percent in Sarasota, Fla. but rose 21.9 percent in Salt Lake city, Utah. (Here’s how other markets are doing.)

Above all, figure out how much you can afford, and don’t get talked into a bigger house by real estate agents, mortgage brokers or builders who tell you the “guidelines” say you can afford a bigger mortgage. No one knows how much you can comfortably afford by you. So make a sensible budget, decide how much you can spend and stick to it.

And don’t forget to budget for a bucket of fresh, white paint for that picket fence.

My friend was told by a "debt counselor" that he should keep his credit utilization ratio at about 30 percent because having it too low would hurt his score. I dispute this notion. My (credit ration) generally sits between 1 and 4 percent based on monthly purchases (paid in full) during a statement period. Can you settle this dispute?
-- John R.,Phoenix Ariz.

In general, making generalizations about credit scores is not a good idea.

According to the people who created the scoring system, a lower credit utilization is usually gives you a better score. That's why closing credit accounts without paying down debt on open accounts can lower your score. By reducing your total credit limit without a corresponding drop in your debt balance, you raise the ratio of debt to credit limit.

Still, your score is based on a complex formula that takes a number of factors into account. For more on how it works, check out the Fair Isaac & Co (FICO) Web site. They used to be fairly secretive about how the scoring works, but these days they’re happy to share the criteria with the public.

As for your friends “credit counselor,” in my opinion many of those holding themselves out as counselors are simply selling more credit. The common scam is to consolidate loans into a new one, charge a higher interest rate and then stretch out the term for many more years to lower the monthly payment. Since most people are so fixed on monthly payments they go along with this. But they end up paying much more interest before the loans are paid off.

The only credit counselors we believe to be legit are those certified and affiliated with the National Federation of Credit Counselors. You can find one in your area by going to www.nfcc.org.